US citizen selling property to pay for son's

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My question is: US-specific
QUESTION: My son is a 17 year old High School senior and will start college in the fall semester of 2004.
To fund his education I will be selling real estate valued at $45,000.
Since the entire proceeds will be used for educational purposes is there any way that I can avoid paying tax on the gain from this sale?
Can the entire amount be put into a 529 account?
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david  ingram replies:
The last figure I saw suggested that fewer than 20% of Americans even knew about 529 plans and I am a Canadian living in Canada who specializes in the problems of  expatriate Americans such as those living in Saudi Arabia, Libya, Dubai, etc.
However, your question is of concern to all of us with 16 and 20 year old sons (as I have) so here goes.
There is no exemption from Capital Gains Tax  when selling the property for educational purposes.  You can put the entire amount into a 529 plan BUT because it exceeds $11,000, you must file a Form 709 Gift Tax Return.  You can actually put up to $55,000 ($110,000 if you and your wife) into the 529 plan and a special provision allows you to spread it over 5 years to qualify for 5 x $11,000 a year or $55,000 gift tax exemption.  Of course, if you do this, you cannot give away anything else in the next five years because you have already used up your $11,000 a year fro the next five years.  The $45,000 you mention would be no problem.
You also have to watch out when making your withdrawals.  For instance, if your expenses were $12,000 and you removed $12,000  and then wanted to use $2,000 for the $1,500 Hope Credit, you would be left with $2,000 of the 529 plan as taxable income.
The 529 plan can also seriously restrict your child's eligibility for state and federal tuition support.  Be careful.
I usually love to put in here that I would be glad to help you.  Not true here.  You need someone who is a specialist in your state's plans.  I am not and do not expect to have that expertise.
A good website that you may want to look at is: http://www.savingforcollege.com/529_plans/get_started_program/
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321 
New email to [email protected]
www.centa.com www.david-ingram.com
Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
This from "ask an income tax and immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate:
multi jurisdictional cross and trans border expatriate problems  for the United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait, Dubai, Saudi Arabia, South Africa,  Thailand, Indonesia, Egypt, Antarctica,  Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, American and Canadian and Mexican and any of the 43 states with state tax returns, etc.
  Alaska,  Alabama,  Arkansas,  Arizona,  California,  Colorado, Connecticut,  Delaware, District of Columbia,  Florida,  Georgia,  Hawaii,  Idaho,  Illinois,  Indiana,  Iowa,  Kansas,  Kentucky,  Louisiana,  Maine,  Maryland,  Massachusetts, Michigan, Minnesota,  Mississippi,  Missouri,  Montana,  Nebraska,  Nevada, New Hampshire,  New Jersey, New Mexico,New York, North Carolina,  North Dakota,  Ohio,  Oklahoma,  Oregon. Pennsylvania,  Rhode Island,  South Carolina,  South Dakota, Tennessee,  Texas,  Utah, Vermont,  Virginia, West Virginia, Wisconsin, Wyoming, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec City, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland, Yukon and Northwest and Nunavit Territories,  Mount Vernon, Eumenclaw, Coos Bay and Dallas  Taxman and Tax Guru Your name has been added to our email list because of an enquiry we have received,  we may not answer your question but 
another similar question will be as we lump them.
You may find more answers at www.centa.com
David Ingram of the CEN-TA REALTY  Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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